Government coercion of the financial sector to make irresponsible loans was the primary driver of the 2007-08 financial meltdown. Yet, as we’ve previously observed here, “Washington has searched every place but within for a scapegoat” – with the Obama Justice Department pursuing politically motivated investigations, prosecutions, and civil lawsuits against banks and credit rating agencies in order to concoct a history that blames predatory lending rather than statist policy.

Now we learn that Eric Holder, the Tom Hagen of this racketeering enterprise of an administration, is using the vig that DOJ muscle is extorting from the banks to pour tens of millions of dollars into the coffers of the radical Left’s top rabble-rousers – in addition to diverting what should be public funds to pay off delinquent debts in cities that Democrats have destroyed.

Buried in the fine print of the deal, which includes $7 billion in soft-dollar consumer relief, are a raft of political payoffs to Obama constituency groups. In effect, the government has ordered the nation’s largest bank to create a massive slush fund for Democrat special interests.

Besides requiring billions in debt forgiveness payments to delinquent borrowers in Cleveland, Atlanta, Philadelphia, Oakland, Detroit, Chicago and other Democrat strongholds — and up to $500 million to cover personal taxes owed on those checks — the deal requires BofA to make billions in new loans, while also building affordable low-income rental housing in those areas.

If there are leftover funds in four years, the settlement stipulates the money will go to Interest on Lawyers’ Trust Account (IOLTA), which provides legal aid for the poor and supports left-wing causes, and NeighborWorks of America, which provides affordable housing and funds a national network of left-wing community organizers operating in the mold of Acorn.

The editorial goes on to explain that NeighborWorks, in fact, provided $25 million in 2008-09 to the housing division of the notorious, Obama-allied ACORN – the Association of Community Organizers for Reform Now, which ostensibly disbanded after a 2009 scandal dried up its government funding. In 2011, NeighborWorks doled out $35 million to similar groups, including the “Affordable Housing Alliance,” which pressures banks to make the kind of high-risk loans that caused the financial crisis and has ties to Obama officials.

The editorial continues:

BofA gets extra credit if it makes at least $100 million in direct donations to IOLTA and housing activist groups approved by HUD.

According to the list provided by Justice, those groups include come of the most radical bank shakedown organizations in the country, including:

• La Raza, which pressures banks to expand their credit box to qualify more low-income Latino immigrants for home loans;

• National Community Reinvestment Coalition, Washington’s most aggressive lobbyist for the disastrous Community Reinvestment Act;

• Operation Hope, a South Central Los Angeles group that’s pressuring banks to make “dignity mortgages” for deadbeats.

Worse, one group eligible for BofA slush funds is a spin-off of Acorn Housing’s branch in New York. It’s now rebranded as Mutual Housing Association of New York, or MHANY. HUD lists MHANY’s contact as IsmeneSpeliotis, who previously served as New York director of Acorn Housing.

The recession has dried up funding for such groups. But Holder’s massive bank shakedown could rebuild their war chests in a hurry.

The Bank of America heist is not a one-off for the Obama Justice Department. IBD reminds us that similar funding for Democrat activists has been written into the $20 billion in settlements for which JPMorgan Chase and Citibank were shaken down. This is massive fraud and extortion. The heavily regulated financial institutions are at the government’s mercy – that’s why they were making the bad loans in the first place, under pressure from politicians and the very organizations Holder is now inducing them to underwrite.

Republicans control the House and can refuse to fund government activities. And the cut off of support for ACORN shows the Senate can be brought around when the stench is bad enough. So why are we funding an out of control Justice Department to the tune of over $26 billion per year? Why is this budget not drastically reduced to cut off DOJ’s capacity to file politicized suits against sovereign states and financial institutions while practicing unconstitutional racial discrimination in the enforcement of the civil rights laws? Why, when everyone knows this is a racket — i.e., that the targets of these lawsuits will be cowed into settling on bad terms because they cannot afford to litigate against Justice’s limitless war chest and resources — do we allow it to continue?

Most law enforcement can be handled by the states. That is why we did not even have a Justice Department for most of the first century of constitutional governance. Like most lawyers who’ve spent significant parts of their professional lives at DOJ, I am very proud of the work I was privileged to do there. But the Department has a unique governmental mission in that the administration of justice must be removed from partisan politics. DOJ is only worth having if it is, on balance, a positive for our security and the rule of law. Once the Justice Department deteriorates into a leg-breaker for the party in power, it is no longer worth having.